Complete Update in Social Security Effective This Date – Here’s Everything Retirees Need to Know

Approximately 96.7% of adults aged 60 to 89 rely on Social Security in some form, making it a critical support system. For many, these benefits make up a significant portion of income.

In fact, half of those aged 65 and older receive half or more of their income from Social Security, with 25% relying on it for 90% or more of their income. With the recent announcement of changes to Social Security for 2025, beneficiaries should prepare for what’s ahead.

2025 COLA Increase

Social Security and Supplemental Security Income (SSI) payments will increase by 2.5% starting in January 2025, impacting nearly 73 million Americans. For example, a current monthly benefit of $1,920 will rise to about $1,968, adding roughly $50 per month to recipients’ incomes. While lower than last year’s 3.2% increase, this adjustment is intended to keep up with inflation, which averaged 2.4% for the year ending September 2024. Though modest, this increase helps maintain recipients’ purchasing power.

COLA Increase

Although 2.5% might seem small, this adjustment aims to keep benefits in line with the rising cost of living. This increment should help Social Security recipients maintain their purchasing power as inflation drives up expenses in 2025.

Changes in Taxable Income Limits

Starting in 2025, the maximum taxable earnings for Social Security will rise from $168,600 to $176,100. This means that wages up to this amount are subject to the Social Security tax of 12.4%, split between employer and employee (6.2% each). Here’s what to expect:

• Employee contribution: Maximum payment of $10,918.20
• Employer contribution: Matches the employee amount at $10,918.20

For self-employed individuals, the full 12.4% tax applies, totaling $21,836.40 annually on incomes up to $176,100.

Social Security Notices

Beneficiaries can expect to receive notices with their updated benefit amounts as early as December 2024. This year, the COLA notice will have an improved, simplified design for ease of access. Users with My Social Security accounts can access this information online before it arrives in the mail, and beneficiaries can also opt for email or text notifications for added convenience.

Additional Updates

Those receiving both Social Security and Medicare can monitor changes to both programs through the message center on their online accounts. Medicare changes are set to go live at the end of November, so checking Medicare.gov for updates could be beneficial.

With the adjustments coming in 2025, these Social Security changes aim to help retirees manage rising costs without diminishing their financial stability. By staying informed, beneficiaries can prepare and take full advantage of the adjustments that will shape their benefits in the coming year.

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